Management of Working Capital in Cement Industry

MANAGEMENT OF WORKING WORKI NG CAPIT CAPITAL AL IN CEMENT CEMEN T I INDUST NDUSTR R Y Click to edit Master subtitle style

PRESENTED BY ARPIT GARG

INTRODUCTION Concept of working capital is very important in the field of financial management. For For growth and profitability of a firm working capital management is vital. Net Working Capital = Current Asset – Current Liabilities “working capital is the life blood and controlling nerve center of a business”

CONTINUE…  The term net working capital can be defined in two ways:  The most common definition of net working capital (NWC) is the difference between current asset and current liabilities  Net working capital is NWC is that portion of current assets

which is financed by long term funds

CONSTITUENTS OF CURRENT ASSETS 

Cash in hand and cash at bank



Bills receivables



Sundry debtors



Short term loans and advances.

Inventories of stock as: Raw material, Work in process



Stores and spares, Finished goods 

Temporary investment of surplus funds.

CONSTITUENTS OF CURRENT LIABILITIES 

Accrued or outstanding expenses.



Short term loans, advances and deposits.



Dividends payable.



Bank overdraft.



Provision for taxation



Bills payable.



Sundry creditors.

ADVANTAGE OF ADEQUATE WORKING CAPITAL SOLVENCY

OF THE BUSINESS

Goodwill Easy

loans

Cash

Discounts

Regular

Supply of Raw Material

Regular

Payment Of Salaries

Exploitation

Of Favorable Market

Conditions

CURRENT

RATIO = CURRENT ASSETS /CURRENT

LIABILITES QUICK

RATIO = QUICK ASSETS/CURRENT

LIABILITES (Marketable Securities, Cash in hand and Cash at bank, Debtors) Absolute

liquid ratio =

Determinants of  Working Capital Nature

of industry Nature of industry

Demand

of creditors Cash requirements

General

nature of business

Time Volume

of sales Nature of industry

Demand

of creditors

Excessive working capital Excessive

working capital means ideal funds which earn no profit for the firm and business cannot earn the required rate of return on its investments.

Redundant

working capital leads to unnecessary purchasing and accumulation of  inventories.

Excessive

working capital implies excessive debtors and defective credit policy which causes higher incidence of bad debts.

CEMENT INDUSRTY IN INDIA India

is the second largest producer of cement on the globe after China.

In

total, India manufactures 251.2 Million  Tones of cement per year.

Estimates

state that the production in the sector will touch 262.61 MT in FY12.

Major

players alone account for about 70 percent of the total volume of cement produced in India

Scope and Purpose   The

efficiency of the working capital management and its components

Efficiency

and effectiveness of management

Importance

of taking care of current assets and current liabilities

Optimize

the use of available resources

Checking

out the risk and profitability

Liquidity

and Profitability

Problems of Cement industry Shortage Power

of capital

shortage

Locational Shortage

problems

of coal

Non-availability Defective Negligible

of railway wagons

method of transport share in world trade

Future Ahead of Indian Cement Industry   The

annual demand for cement in India is consistently growing at 8-10%.

Demand

for cement in the country is expected to increase to 244.82 million tonnes by 2012

  The

demand will be at 311.37 million tonnes if  the projections of the road and housing segments are met in reality

Government

is also taking certain measure for

COMPANIES Gujarat

Ambuja Cement

Managalam India

Cement Limited

Cement Company Ltd.

Managalam Cement Limited Company

was incorporated as a public limited company on 27th October 1976

Starting

phase : company does not perform

well Produces

3.25 million tonnes of cement

Upgraded Analyst

their technology in 2011

advice to buy for the investor for long term basis

Gujarat Ambuja Cement   The

company was incorporated on 20th October, 1981 as Ambuja Cements Pvt.Ltd

Public

limited company on 19th March 1983

Latest

technology adopted by company

Collabrations

with foreign companies

In

2011 it has capacity of producing 25 million tonnes of cement.

Its

stock also performing well in 2011 analyst(ashwani gujral) recommend to buy

Continue…

India Cement Company Ltd. It

was established in 1946 and the first plant was set up at Sankarnagar in Tamil Nadu in 1949

It

has about seven cement manufacturing plants spread over Southern India catering to major markets in South India and Maharashtra.

India

Cements Ltd. also owns Indian Premier League's Chennai franchise, Chennai Super Kings.

Continue….   The

Company's plants are well spread with three in Tamilnadu and four in Andhra Pradesh which cater to all major markets in South India and Maharashtra.

  The

Company is the market leader with a market share of 28% in the South. It aims to achieve a 35% market share in the near future. The Company has access to huge limestone resources and plans to expand capacity by de-bottlenecking and optimisation

LIQUIDI  TY RATIO MANGALAM

CEMENT

ES OF FUND MANGALAM CEMENT



NG CAPITA L 

MANGALAM CEMENT

REFRENCES 8_dp_singh_review_article_june_2011

http://money.rediff.com/companies/india-cements-lt http://money.rediff.com/companies/ambuja-cement http://money.rediff.com/companies/mangal am-cement-ltd/11510022

Thank you